Senate Passes Tax Patent Reform

On March 8, the Senate passed “The America Invents Act” (Patent Reform Bill). Sec. 14 of this bill would prevent individuals or firms from receiving patents on tax avoidance strategies. Dozens of such patents have been issued, and applications for dozens more are now pending.

This is a meaningful win for all taxpayers because a huge industry has sprung up to create and promote tax avoidance strategies - some of which were duious or outright illegal. In my opinion, it makes no sense to issue a patent that may limit how the tax code may be used, regardless of how novel or inventive it may. Several patented strategies in the area of estate tax planning have arisen in recent years. It's hard enough to comply with the tax code without having to worry about impinging on someone else's patent. Now, we are one step closer to making the tax code the rightful property of all taxpayers. Congress does get things right from time to time.